The midnight shift returns with a vengeance as automakers hustle to boost production

At General Motors, nearly one in five U.S. hourly workers now clocks in close to midnight and goes home around sunrise.

GM has more assembly plants in North America running overnight than the entire auto industry did at any point from 2000 through 2009.

"They're going to three shifts at just about every plant now," says George Ruiz, president of UAW Local 31 in Kansas City, Kan. GM's 25-year-old plant there, which never ran on more than two shifts until January 2010, has had three ever since.

GM -- prodded by the Obama administration's auto task force, which viewed overnight downtime as a lost opportunity for profits -- was the first automaker to begin using three shifts widely as the industry recovered from the recession.

Ford Motor Co., Chrysler Group, Nissan Motor Co. and Kia Motors Corp. have followed suit, and many of their suppliers have added overnight shifts in turn. Hyundai Motor Co. begins a third shift at its Alabama plant in September.

By the start of next year, 22 of the 83 assembly plants in North America will operate with three shifts of workers, and nearly half of all vehicles built here will come from a three-shift plant, according to forecasts by IHS Automotive. "It's never been that high," says IHS analyst Michael Robinet.

"The days of building vehicles on two shifts and being satisfied with that are finished," Robinet says. "They are absolutely going to maximize their brick-and-mortar as much as possible."

Even when sales surpassed 17 million vehicles a year in the early 2000s, no more than seven out of more than 100 assembly plants ran on three shifts at any one time, according to IHS. But with fewer plants open now and industry sales on the rise, a traditional, two-shift schedule is not sufficient for many hot-selling models, such as the Chevrolet Cruze, Ford Focus and Nissan Altima.

And as the market continues to rebound, Robinet and other analysts say three shifts will not be enough either. Automakers soon will need to bite the bullet and build plants to avoid losing sales to rivals.

"These sorts of shift arrangements only work for so long," says Sean McAlinden, chief economist at the Center for Automotive Research. "Some big decisions have to be made. We've got to put some buckaroonies down and build capacity to grow with the market."

'Reluctance to invest'

GM is reopening its plant in Spring Hill, Tenn., this year because three shifts of workers at two plants in Canada cannot build enough Chevrolet Equinox crossovers to satisfy demand. But beyond that, automakers and their suppliers are hesitant to break ground on a multibillion-dollar plant, or even reopen one they spent time and money shutting down. They fear damaging their now-healthy profit margins if a product comes up short of its targets, or ending up with too much capacity if the economy falters.

Likewise, suppliers are holding off on new plants even as their customers demand more capacity by running plants 24 hours a day, six or seven days a week.

"We cut capacity to the bone and are enjoying the best prices in 30 years," McAlinden says. "That really creates a reluctance to invest."

Even with three shifts, McAlinden says he expects GM and Chrysler to run short on truck capacity next year and Ford to need more capacity for cars.

GM's capacity utilization rate, calculated on the standard two-shift basis, reached 103 percent in the first quarter. In 2009, IHS calculated the industrywide utilization rate at just 52 percent.

"We're quite comfortable running at that level of capacity utilization and even higher," CFO Dan Ammann said during GM's first-quarter earnings call.

Ford has conceded that it will suffer its first decline in market share since 2008 because it underestimated demand and waited too long to adjust production.

The company added third shifts in May at assembly plants in Chicago and Wayne, Mich., and an engine plant near Cleveland. Ford's Louisville, Ky., assembly plant, which is building the redesigned Escape crossover, just started a second shift and will begin a third this year.

"We're always monitoring the situation, and we'll be addressing it as we progress," says Erich Merkle, Ford's chief sales analyst. "It's a good problem. The ride up is certainly much better than the ride down that everyone had to experience."

Changes to the UAW's contracts with the Detroit 3 are one reason third shifts have become common. Instead of continually paying existing workers for overtime, the companies can hire a third shift of workers on the lower entry-level wage scale. New so-called Tier 2 hires start at about $15 an hour, a little more than half the $28 rate for veteran employees, who also receive more benefits.

Flexible assembly lines, which can build several models, also promote three-shift operation. Lines capable of building one nameplate at a time were rarely needed to run more than two shifts.

Another factor is modern, more durable equipment that can run continuously for longer periods and is less susceptible to breakdown. That makes nightly shutdowns unnecessary at most plants.

In a variation of the three-shift approach, Ford and Chrysler have negotiated to create what are known as "three crew" schedules, in which workers spend 10 hours a day on the job four days a week and their shifts are arranged in a pattern that keeps the plant open six or seven days a week. The companies say that setup is more efficient and creates time for maintenance work, which was often deferred in three-shift operations in the past, though it can be harder on workers.

At Hyundai's 7-year-old plant in Montgomery, Ala., workers have been putting in an average of 52 hours a week for about two years to meet demand for the Sonata and Elantra sedans.

By adding a third shift in September and moving to eight-hour workdays, down from 10 hours, Hyundai expects to eliminate most overtime and increase output by about 18 percent, or 250 cars a day, says spokesman Robert Burns. He estimated that Hyundai's suppliers will add about 1,000 jobs to support the extra production.

Even though sales of its Alabama-made cars have been booming, Hyundai is taking its time installing the new shift.

Says Burns: "We don't want to do anything to impact quality, so we're going to slow the line down to let the new team members ramp up."